For one reason or another we’re getting more and more questions about “what should I do?” and other such variations of this question. With that said lets go ahead and set the framework. Assuming you are young and intelligent you should have a lot of choices. So lets go ahead and break this down step by step with the following outline
1) What Careers are even worth pursuing and why?
2) What is a Job and what is a Career?
3) But so many people make $150-250K per year, what about them?
4) But isn’t everyone replaceable?
5) How do I find a legitimate mentor to show me the truth?
6) How do I find out if I have an interest in this?
7) Why do you talk about starting businesses if you’re talking about careers?
8) Concluding remarks
Once you’ve gone through this post you’ll have all the tools you need to make an intelligent decision about your career. If you mess this step up you’ll lose $5M+ over the course of the next 30 years and you will also work 2x as many hours. That is not a typo.
1) What Careers are even worth pursuing?
The only careers worth pursuing are Sales (ANY variation, higher end the better), Silicon Valley (equity exposure) and Wall Street (front office – Hedge Funds/Private Equity/Investment Banking/Sales & Trading/Research, in that order… feel free to flip PE and HF if you love transactional work). It really is that simple and the hard work has been done for you in a single sentence. Here is how the leverage works in each one of these industries
- Sales: You are paid for each sale you make. Each sale is an *event*
- Silicon Valley: The leverage in your financial model is equity the sale of the security is the *event*
- Wall Street: You are paid for each transaction closed *event*, or each position closed *event* and to a lesser degree each handshake that results in increased business *event*
2) What is a Job and What is a Career?
This is pretty simple. Event is underscored in an annoying way above for a reason, in any other position you have no event. You simply work more hours and you get paid more or less and your hourly wage moves up or down based on your tenure etc. You are essentially a money making machine for someone else.
No matter how high your hourly wage is, someone else is writing your check correct?
Lets play a game then… You are a business owner and you are paying Joe Hourly a wage of $500/hour! Man that’s a lot of money! Wait… As a rational business owner… You are only going to pay him a fraction of his actual value otherwise he should be fired right? Correct.
Want to be depressed now? In general you are being paid 5-10% of your net value. Go through the revenue, operating expense and net-income line of your company if you want to see the truth.
3) But so many people make $150-250K per year, what about them?
Playing musical chairs! You remember that game in elementary school? That is exactly what you are playing if you are not the first hand shake revenue generator.
Lets see what happens if there is a recession. Most people (see people who think $100K is a lot of money – it’s not), believe it is “last in first out”… When in reality it is based on headcount for each office and the business performance in each sub-segment of the firm (usually revenue and net profit).
With all that said… You make $150-250K a year this must mean someone who matters knows who you are right? You couldn’t be more wrong.
Since most people don’t take the effort lets look at an extremely basic calculation from a company everyone knows… Walmart for the real nerds you can double check our work here. At SEC.gov:
http://www.sec.gov/Archives/edgar/data/104169/000010416914000019/wmtform10-kx13114.htm
Walmart Example:
“As of the end of fiscal 2014, the Company and its subsidiaries employed approximately 2.2 million employees (“associates”) worldwide”
“During fiscal 2014, we generated total revenues of $476 billion”
Now lets do some real simple math here…
Average Revenue Per Employee – $476,000,000,000/2,200,000 = $216,364
Think about it. Walmart… a massive retail store that employees hundreds of thousands of people at minimum wage can generate revenue of $216K/employee. If this doesn’t make you feel replaceable nothing will.
4) But isn’t everyone replaceable?
In short, YES. Even that BSD Managing Director is going to be replaced by someone, maybe they find someone who makes less in revenue but they can secretly pay him less which in turn improves business margins. Maybe they can consolidate two sets of clients and give it to the even bigger BSD since he wants to earn more money for his family this year. In short, yes a thousand times yes everyone is replaceable.
Now this question misses the point of course – by a country mile in fact. By choosing a legitimate career you are doing multiple things: 1) you become less replaceable – downside protection, 2) have numbers to point to in terms of revenue generation – ability to leave to a competitor, 3) be paid based on performance – generate significantly more in a macro up tick, 4) let your savings buy you precious time and…. the REAL point
By going into a revenue generating role you are building skills that will be directly transferable to starting your own successful business in the future
5) How do I find a legitimate mentor to show me the truth?
Okay I finally get it you say.
“By going into one of these three industries I am building a skillset early that will drive future earnings in an exponential fashion instead of a linear fashion. My job will likely be gruelling as I learn the ropes but I will be paid well and will give myself a future I wouldn’t even believe myself”
Now how do you find out which industry is right for you? The answer is look 7-10 years ahead of you
Why do you have to look so far into the future? The people who are only 2-3 years ahead of you are likely 1) bitter or 2) poor performers.
Why? For high compensation positions the drop out rate is 80-90% in the first three years. This means if a guy is fresh on the job, the chances you’re talking to a poor performer is significantly higher than you talking to a top performer.
With that said, if you like real estate search for a real estate agent in his early 30s if you’re in your early 20s. If you’re thinking about Wall Street, do not bother with the opinions of people who are not Vice President or higher. If you are looking at engineering, contact people who went to top engineering firms and left after 3-5 years.
This is a rare case where the people 2-3 years ahead of you will always lead you astray because chances are you’re not talking to a winner.
6) How do I find out if I have an interest in this?
We get this question a lot and here is some more harsh truth. This is a dumb question.It is a dumb question because it implies that you never even tried it. Go try it and find out which one you like the most and go for it.
Make sure you like it because it is better to be happy for 52 weeks out of the year instead of only 2 weeks out of the year — see the vast majority who hate their jobs.
7) Why do you talk about starting businesses if you’re talking about careers?
This one is a layup. Most people even, even talented people, do not have the skills to start a business immediately. Most don’t have the risk tolerance or simply don’t have the business acumen established.
There is no reason to put your personal finances into a downward spiral if you do not have to. Build a career and continue to think about business ideas on the side. Once you get one feel free to leave.
Anyone with experience knows, on a risk adjusted basis, your own business is the best way to get rich. So absolutely go for it, when the opportunity is there.
8) Concluding Remarks
We already know that people are going to jump in with “exceptions to the rule”. At the end of the day these exceptions always have the same story, the person caught a break or somehow eventually ended up in a 1) business or 2) quasi sales position.
You can absolutely start your career at a McKinsey, a Google – non-engineering, a start up – non-engineering, etc. Just remember that if you want leverage you’re going to need to generate at some point. If you’re looking to skate by without any generation… you’re making the worst personal and financial decision of your life. The last thing you want to do is *have* to work in your 30s, better to *want* to work in your 30s.
